Tahlequah Daily Press

November 29, 2012

Land deal takes couple’s ‘life savings’

Staff Writer

TAHLEQUAH — When Craig and Cindy Rice decided to relocate from Texas to Cherokee County this past summer, they had no idea they’d end up losing their life’s savings.

The Rices were shopping for retirement property, and they decided to take advantage of the IRS 1031 Exchange Program, wherein they would trade a piece of property they owned in McIntosh County for 80 acres near Buck Ford, along the Illinois River in Cherokee County.

“The Realtors – Century 21 Wright Real Estate, and Cochran, which was the listing Realtor – knew we were wanting to build a home for retirement and bring livestock in,” said Cindy. “We closed on the property on June 19, paid $175,000 cash - which was our life’s savings – for the 80 acres and to build a home.”

Cindy said Bud Potts, of Nuway Building Construction, and his daughter, Brandi Potts-Clinton, also helped the Rices find the property, through Century 21.

“We looked at the property, and Maria LeDoux, of Century 21, said it was in a flood plain,” said Cindy. “We asked how deep the water would get in a flood, and LeDoux pointed down toward the river, saying it would only get 23 inches deep and it would be down the road [toward the river] from us. We had no reason not to believe her.”

But Scott Wright, owner of Century 21 Wright Real Estate, said Rice signed a disclosure agreement acknowledging the property was in a flood plain. Wright provided the Press with a copy of that document.

“Maria was working the floor and got a call from a man who said he was helping a friend find a piece of property,” said Wright. “She doesn’t recall the man’s name, but I suppose it could have been Potts. She came up with a couple of properties, one of which was the 80 acres in question, but she was unaware of any agreement between the parties with regard to building.”

Wright said the Rices entered into a contract with Century 21 on May 25, and were advised by the listing associate – Cochran Real Estate – that the property was in the flood plain.

“They signed a disclosure agreement, and they had 10 days to back out and they didn’t,” said Wright. “Maria said, basically, after the original meeting between [Potts] and the Rices, she didn’t have any further communication with the builder. Maria received a request from the Rices in September, asking for a copy of the complete file, which she made and mailed to them, including the disclosure agreement.”

Allen Campbell, Realtor for Cochran and Associates, said he told the Rices repeatedly about the flooding danger.

“I told them over and over again that property would flood,” said Campbell. “The builder said he’d seen it flood by about 7 inches, but I told them I’d seen it flood by 7 feet.”

Cindy indicated she also asked Bud Potts about the possibility of flooding.

“Potts said he had lived in this area his whole life, and he said he had never seen the river get high enough to flood that bad,” said Cindy. “The spot where we were building was a quarter-mile west of the river, and the bank has a 20-foot drop-off. We didn’t know the water would come from behind the house, running down in the slues. We’re from Texas, so you have to understand we couldn’t conceive of the place flooding.”

Potts offered to build a swell in front of the home to abate Cindy’s concerns.

“Well, we bought the property,” said Cindy. “Shortly after that, we got a call from [District 1] Cherokee County Commissioner Doug Hubbard in mid-July, who warned us about the flooding potential, but the builder told us it would never happen. Then we got a letter from Oklahoma Scenic Rivers Commission Administrator Ed Fite, and that’s when I knew we had a problem.”

By the time the Rices received Fite’s letter, the slab had been laid and the shell of the home had been completed, along with the installation of the windows and doors. It was after Fite’s letter arrived that the contractor, Bud Potts, quit showing up at the site.

“We already had the shell [of the house] up and our bank account had been cleaned out,” said Rice. “We couldn’t get utilities run to the place, because the engineer from Lake Region Electric Cooperative said if the river were to flood, our house would be 7 feet under water. Twenty-three inches is a far cry from 7 feet.”

Rice said the contractor had obtained a flood plain permit from the county.

According to Laura Hendricks, Cherokee County Floodplain Program administrator, Brandi Potts-Clinton made application for the floodplain permit in Rice’s name, but did not indicate a home had been built on the property.

“First of all, you can build anywhere in the county; there are no restrictions on that,” said Hendricks. “But to obtain electricity through Lake Region Electric Cooperative, you have to prove the structure is not built within a flood zone. After the permit was issued, Ed Fite contacted us and told us a structure had been built on the property and that it was built in a flood zone. In Cherokee County, homes have to be built 2 feet above base flood elevation.”

Oklahoma Water Resources Board Floodplain Administrator Gavin Brady said a base flood elevation had not been determined by the county.

“What we normally do is determine the base flood elevation and make sure the lowest floor of the structure is built at or above that elevation,” said Brady. “[Cherokee County officials] did not have that base flood elevation information. Coincidentally, I called [Hendricks] this morning, and told her I’d come out next week to do an evaluation of the program and help get the situation resolved.”

Brady said if the structure is proved to be built below the base flood elevation, the county would be responsible for elevating the structure.

“There’s one other option, a FEMA Form 1316, that if the county goes through the measures to mitigate the property and is unsuccessful, they can issue a 1316, preventing the sale of the property until the situation is resolved,” said Brady.

Rice said she has retained counsel to investigate disclosure by the Realtors, and has reported the allegation of contractor fraud to the Cherokee County Sheriff’s Office.

“The builder ran off with our money, and [Cherokee County Sheriff’s Investigator] Nate King is taking care of that,” said Rice. “There’s no way they spent $141,000 on that shell.”

King confirmed Wednesday the CCSO has an open investigation into Nuway Building Construction (NBC) for contractor fraud, but could not confirm if Potts is listed as owner of the company.

“What they did to us was just cruel,” said Rice. “I would not do this to anyone else. I’m upset that they [contractor and Realtor] didn’t tell us the property was in the flood plain. I just don’t want this to happen to anyone else.”

Calls to Nuway Building Construction were unanswered by press time.

UPDATE: On May 9, Charla Slabotsky, executive director of the Oklahoma Real Estate Commission, notified Scott Wright and Maria LeDous of Wright Real Estate LLC, that after reviewing the property sale to Craig and Cynthia Rice, the commission finds Wright and LeDoux did not violate license code, and the case has been ordered closed. The Rices accused the real estate agencies of not properly informing them the property they purchased is in a flood plain.